Argentina Industry June 2018

Argentina: Industrial production contracts at sharper pace in June

August 3, 2018

In June, industrial production plunged 8.1% over the same month last year, according to data released by the National Statistical Institute (INDEC) on 2 August. The figure represents a significant deterioration compared to May’s 1.2% year-on-year drop and marks a multi-year low.

June’s fall reflected contractions in almost all components of the index. The most notable drops were recorded in oil refining, the automotive industry, and the production of rubber and plastic products. The decline in production of processed crude oil was due to plant shutdowns in June, while shrinking domestic demand was chiefly behind the automotive industry’s poor showing. The only bright spot was production in basic metal industries, which hit almost two-digit growth on the back of a jump in crude steel production.

Argentina Industrial Production Forecast

Panelists participating in the LatinFocus Consensus Forecast expect industrial production to expand 2.4% in 2018, which is up 0.2 percentage points from last month’s forecast. For 2019, the panel expects industrial output to rise 2.0%.

The monthly indicator for economic activity (EMAE, Estimador Mensual de Actividad Económica) contracted 5.8% in annual terms in May, which was below the revised 0.6% fall recorded in April (previously reported: -0.9% year-on-year) and marked the worst performance in nearly nine years.
The contraction came on the back of a significant decline in agriculture, livestock, hunting and forestry activity, which plunged 35.2% in May (April: -30.3% yoy; previously reported: -30.8% yoy).

At its latest meeting held on 10 July, the Central Bank of Argentina (Banco Central de la República Argentina, BCRA) decided to leave the seven-day repo reference rate unchanged at an all-time high of 40.00%.

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